Is Luxembourg’s wage indexation being skewed by “hidden” price changes in shops? According to Economy Minister Lex Delles, there is no cause for concern, as wage increases do take these changes into account.
In recent years, rising food prices have taken different forms. Some are obvious, such as when the price of a pack of pasta goes up, while others are more subtle, for example when the quantity decreases but the price remains the same or changes only slightly.
This practice, where consumers get less for the same price, is known as “shrinkflation”.
In response to a parliamentary question from the Alternative Democratic Reform Party (ADR), Delles confirmed that the index is not distorted by this phenomenon.
As he explained to MP Fred Keup, price monitoring carried out by the National Institute of Statistics and Economic Studies (STATEC) takes into account the quantities of goods sold in Luxembourg shops, not just their listed prices. For instance, if a product shrinks from 500 grams to 400 grams without a price change, STATEC records this as an effective price increase.
Since price monitoring is directly linked to the wage indexation mechanism, which is triggered when inflation reaches 2.5%, salary increases are therefore not distorted by such practices in the food industry.
Delles also noted that regular quality adjustments are made across other categories in the consumer basket to ensure the scientific integrity of the national consumer price index. STATEC tracks around 100,000 products to compile this basket of goods and services used to trigger indexation.
The next index-linked wage increase is expected before the summer.
